The new draft rules for civil aviation that are expected to replace the irksome 5/20 rule may be cleared soon, despite strong opposition from existing domestic carriers. A court battle may ensue
Practically, from the time he took over as the Union Minister for Civil Aviation, Ashok Gajapathi Raju has stated on several occasions that the existing rule of 5/20 has no parallel in any other country!
This current law of 5/20 implies that the domestic airline must have at least 5 years’ experience and a fleet of 20 aircraft before being permitted to fly on international routes. However, it may be noted that, paradoxically, foreign airlines are allowed to fly into the country without similar restrictions. For this reason alone, the government has been thinking in terms of scrapping the current law and replacing it by a more realistic and practical rule. Now, this is on the anvil!
The present group of existing domestic airlines, before Air Asia and Vistara came into the picture, has been vehemently opposed to this waiver of the rule, as they claim that they had to go by the book, wait for five years, and increase the fleet to 20 before being allowed to fly overseas!
These are Jet Airways, IndiGo, Spice Jet, Air India and Go Air. At the present, according to the press, Spice Jet is undergoing a management structural change and infusion of capital by Ajay Singh, and sale of Maran's entire holdings. Out of the above group, only IndiGo has been making profits consistently for the last several years. Rest are making loss and in heavy debts. They all belong to FIA to which, so far, both Air Asia and Vistara have not been admitted. There are several other regional airlines, such as Air Costa, Air Pegasus and Zav Airlines that does not appear to have shown much interest in the Federation.
The new draft rules that are expected to replace the irksome 5/20 rule may be cleared soon, despite strong opposition from existing domestic carriers. A court battle may ensue!
The new draft rule is likely to include heavy traffic sectors (routes) from existing 12 to 26 destinations by including sectors on which over five lakh passengers have flown in 2013. This will include sectors like Mumbai-Chandigarh and Delhi-Pune. The new rule may cover airports such as Dehradun, Simla Kullu, and Dharmashala.
Civil Aviation Ministry are planning, according to the press, to introduce innovative rules by introducing a system of airlines "earning" domestic flying credits (DFCs) on Category II and unused airports and will have a greater weighted average for earning DFCs. Full details of how these will be worked are expected to be announced soon. Instead of 5 year rule, an airline must have "earned" 200 crore DFCs and at least have 5 aircraft before being allowed to fly overseas. Should the DFCs earned is less than the minimum 200 crore required, they may be allowed to "buy" upto 25-30% of the needed DFCs from other airlines! This would mean, probably, a "premium" to be paid or some sort of barter deal?
Passengers are expected to "earn" miles by the amount of money spent, and now, we have the prospect of airlines themselves "earning" DFCs! Competition is going to be intense, and it is likely, as a result, quality of service will also improve.
As a result, instead of this five year mandatory requirement in force, when the new rules are in introduced, and airlines earn sufficient DFCs, they would be able to apply for permission to fly on international routes!
At the moment, airlines follow the technique of offering cheaper one way fare and the return becomes expensive, from India. It is hoped that a competitive pricing may follow to ensure passenger loyalty!
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
